Evaluation of the Mechanism and Effectiveness of Digital Inclusive Finance to Drive Rural Industry Prosperity

Abstract

Digital inclusive finance is an important policy for promoting rural industrial development in China. Can digital inclusive finance effectively contribute to the development of rural industries? What is its driving mechanism? Clarifying these questions can: (1) Release the value of digital inclusive finance; (2) Strengthen its driving role in rural industrial development; and (3) Implement the concept of inclusive development to give rural industrial subjects a greater sense of access and well-being. Based on the interpretation of the connotation of rural industrial prosperity, this paper constructs a theoretical framework of “digital inclusive finance—alleviating financing constraints—rural industrial prosperity”. Using the panel data of 31 provinces in China from 2011 to 2020, the study adopts the entropy weight method to measure the rural industry prosperity index; at the same time, it constructs a panel regression model to conduct benchmark tests, mediating effect tests and heterogeneity tests on the mechanisms and effects of digital inclusive finance to promote rural industrial prosperity. The article finds that digital inclusive finance effectively drives rural industrial prosperity; the alleviation of financing constraints plays a fully mediating role; the effect is significant in less economically developed regions. Therefore, this article proposes policy recommendations to advance rural digital construction, promote the digital transformation of traditional financial institutions, strengthen the regulation of internet-inclusive finance, and enhance the financial literacy of inclusive groups.